September 29, 2011
Greece faces a desperate catch-up effort to achieve this year’s budget targets after reporting the central government deficit widened by almost a quarter per cent for the first eight months of this year.
Talks with international lenders, which resumed on Thursday, are intended to wrap up details of the 2012 budget and of structural reforms to reduce public sector spending so that Athens can receive its next €8bn slice of bail-out funding, according to Greek officials.
But the year-on-year increase in the central government deficit of 22.2 per cent from January to August indicates new measures may be needed for Athens to meet its commitment to reducing the overall government deficit from €24.1bn to €17.1bn this year.
International lenders will determine the size of Greece’s latest budget shortfall in the next few weeks. There is pressure from some policymakers in Germany and the Netherlands to ensure private sector bondholders make a bigger contribution to a second Greek rescue package.